2019 (5) TMI 90 - DSC - GST

Grant of anticipatory Bail - availing Input Tax Credit of GST without actual supply of goods, which is punishable u/s 132 of the CGST Act, 2017 - applicant Rajiv Malhotra is the Director - no likelihood of his evading the process of law - no reqeuset to police custody of the applicant entitles him to grant of bail? - habitual offender - HELD THAT - The IO has shown, in the case file, statement of witnesses and other record regarding the non-supply of goods to MCPL and some of the firms/ entities being dummy/ non-extent, Issuance of invoices or bills without supply of goods can have wide ramifications. It is well settled that economic offences fall in a separate class and are to be viewed seriously, Admittedly, the applicant was earlier also involved in a similar case and despite the same he has allegedly again committed the offence. As per the IO there is a reasonable apprehension of the applicant tampering/influencing with the evidence/ witnesses. The investigation is at initial stage. In view of the facts and circumstances of the case, it is considered that no ground forgrant of anticipatory bail is made out. Therefore, the application for anticipatory bail is dismissed.

Summary

Issues:
Application for anticipatory bail under Section 438 CrPC for applicant Rajiv Malhotra regarding availing Input Tax Credit of GST without actual supply of goods.

Analysis:
The case involves the applicant, a Director of M/s Malhotra Cables Pvt. Ltd. (MCPL), accused of availing Input Tax Credit of GST without actual supply of goods, punishable under Section 132 of the Central Goods and Services Tax Act, 2017. The applicant seeks anticipatory bail due to apprehended arrest following visits by tax officers to his residence. MCPL, a leading manufacturer of automotive cables, denies the allegations, claiming strict compliance with tax laws and payment of over ?35 crore as GST. The applicant argues that the department's theory is disproved by extensive documentation of copper scrap transactions, including tax invoices, E-way bills, and registers. The department provisionally attached MCPL's property and seized goods, valuing over ?70 crore, leading the applicant to assert that arrest is unnecessary.

The applicant's counsel argues that the applicant cooperated with the investigation, provided documents, and paid taxes, making arrest unnecessary. The defense highlights the lack of quantified tax evasion, absence of FIR, and compoundable nature of offenses under the Act. The defense also emphasizes the applicant's strong societal roots and compliance with tax payment timelines. The defense relies on legal precedents to support the grant of bail, citing cases where tax evasion amounts were attached and no arrests were made.

The opposition contends that the applicant, a habitual offender on bail for a similar offense, evaded over ?51 crore in taxes through fraudulent Input Tax Credit claims. The opposition argues that arrest is necessary to prevent further offenses, evidence tampering, and witness influence, as the applicant controlled entities involved in the offense. Legal precedents are cited to support the necessity of arrest in cases of tax evasion, emphasizing the seriousness of economic offenses and the risk of evidence tampering.

The court dismisses the anticipatory bail application, considering the seriousness of economic offenses, the applicant's prior involvement in a similar case, and the potential for evidence tampering. The court notes the ongoing investigation, the wide ramifications of issuing invoices without actual supply of goods, and the reasonable apprehension of witness tampering. Consequently, the application for anticipatory bail is rejected, and the order is to be provided dasti.